How To Make Money In Forex?

July 7, 2015 at 5:27 pm

Just like in other financial markets, you profit in Forex by buying low and selling high or by selling high and buying low.

Your profit is the difference between the purchase price and the sale price multiplied by the number of lots traded (see also What Is A Lot, Mini-Lot, Micro-Lot, Nano-Lot?).

For example, if you buy one standard lot of EUR/USD for 1.1600 and sell it for 1.1700, your profit is 1.1700 – 1.1600 = 0.0100 or 100 pips.

The pip value of one standard lot of EUR/USD is $10. Therefore, your profit is 100 pips x $10 = $1,000 (see also What Is The Value Of A Pip?)

Selling in Forex is very easy. You don’t have to own or borrow the currency pair. You can just sell it and profit from the price decline. For example, if you sell one lot of EUR/USD for 1.1600 and the price drops to 1.1500, you will profit:

1.1600 – 1.1500 = 0.0100 * 100,000 = $1,000